Struggling to recover from a prolonged downturn induced by GST and demonetisation, 2018 remained largely negative for the realty sector. Experts now believe that growth will continue to remain sluggish in the first half of 2019 too, at least until the general elections are over. “The fallout of RERA and GST was still very visible in 2018, but the dust began to settle. With developers and brokers accepting the new market realities and beginning to fall in line, the residential sector began to regain visibility and viability,” Anuj Puri, Chairman Anarock Property observed.
Despite some silver-lining in commercial real estate, experts claim that the general election will further slow down the pace of recovery, at least for residential real estate. “The upcoming elections in 2019 may also keep fresh project launches in check, considering the uncertainties developers may face relating to timeliness of regulatory approvals for projects,” ICRA said.
On the positive side, experts feel that reforms initiated in 2018, will reinstate the confidence of both buyers and investors. “Reforms such as the Insolvency and Bankruptcy Code 2018, setting up of a dedicated Affordable Housing Fund and 100 per cent foreign direct investment in single-brand retail under the automatic route has improved the market sentiment for both industry and investors,” Ramesh Nair, CEO and Country Head, JLL India pointed out.
With the spike in litigation against developers, builders are also expected to be more cautious and responsible and despite low supply, prices are likely to remain almost static in the majority of markets. “2018 was a year where consumers, previously held hostage by lack of efficient regulation, finally felt that they are being heard and represented,” Puri noted.
And, while experts foresee the NBFC crisis to have a spill-over effect in 2019, developers in want of funds may adopt joint development models in the coming months. However, in contrast to the residential segment, commercial reality has been growing steadily with the trend expected to continue. “The office market exhibited healthy growth of 16 per cent in 2018... This trend is likely to continue, with net absorption expected to surpass 37 mn sq ft by the end of 2019,” Nair said.
Another trend the industry is banking on is the listing of the first REIT by the Blackstone-Embassy joint venture. “India’s first REIT listings, now expected to happen in early 2019, will result in massive liquidity infusions into commercial office spaces,” Puri said.